6 Bad Habits To Ditch Now If Looking To Buy A House
By Kurt Real Estate Nov 23, 2019
With the new year in motion hopefully you’ve stuck with those resolutions long enough to get past January. If you’re looking to buy a house in 2017, as many are, it might behoove you to add another resolution to your list – ditch bad financial habits. There are several bad habits anyone can fall into when burdened with high credit card debt and hefty student loan payments. However, if you’re planning to buy, choosing to avoid these could make or break your loan approval.
Bad habit #1: Relying on credit.While the “buy now, pay later” mentality can be addicting, don’t fall into this trap. Using your credit card for the majority of your purchases can put you in over your head. Racking up balances of thousands on multiple credit cards is not going to look good in the eyes of a lender. Using a credit card responsibly for a large purchase, paying it off, and building credit is great, but relying on credit to get by is dangerous. Credit card debt is a slippery slope, so try to wean off your credit cards and stick to spending cold, hard cash.
Bad habit #2: Making late credit card payments (or not paying at all).This goes hand-in-hand with #1. Cumulative late payments can have a serious effect on your credit score. When it comes time to get a mortgage, this is one of the first things a lender will look at. If they see that your score is low due to late or missed payments, you’ll be viewed as a risky investment and it is likely they could pass on financing your loan altogether.
Bad habit #3: Opening multiple credit cards.This is just as bad as #1. Just because you have smaller amounts on each card, does not make the sum of your debt any less. Opening multiple credit cards sends a message to lenders that you like to spend large and this could not only ding your credit score, but it could also lead to a more expensive loan with higher interest rates.
Bad habit #4: Neglecting student loan payments.Missing student loan payments may seem minor, but don’t make this mistake. Like credit card payments, these payments will impact your score and your ability to get a good interest rate.
Bad habit #5: Having a low bank balance. Not only is it important to have reserves for those times that your car needs new breaks or your dog needs surgery, but it is also important for a lender to see that you have enough to do what it takes to maintain a house. When renting, all maintenance and repair costs come out of the seller’s pocket, but when you buy, you’re committing to a lot more than just mortgage payments. You’ll want to rest-assured that you’ll be able to pay for the necessary upkeep..
Bad habit #6: Job-hopping.Steady income is another important factor to a lender. Job stability and length of employment does matter. If you’re jumping from one job to the next every few months or years it could indicate that you’re somewhat of a loose cannon. It’s important to take the steps needed in your career and pursue your goals, but if you’re looking to buy a home soon, think twice before you decide to jump ship.
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